Baar, Switzerland
Sale of Las Bambas Copper Mine Project
14 April, 2014
Glencore Xstrata plc ("Glencore") has signed an agreement for the sale of its entire interest in the Las Bambas copper mine project ("Las Bambas") to a consortium owned 62.5% by MMG Limited, 22.5% by GUOXIN International Investment Corporation Limited and 15.0% by CITIC Metal Co., Limited (the "Consortium").
The consideration for the transaction is approximately US$5.85 billion, payable to Glencore in cash on closing. In addition, all capital expenditure and other costs incurred in developing Las Bambas in the period from 1 January 2014 to closing will also be payable by the Consortium. At the end of March 2014, capital expenditure and other costs incurred since the start of the year amounted to approximately US$400 million.
The proceeds from the sale will immediately and materially de-gear Glencore's balance sheet. Glencore will continue to look for opportunities to reinvest capital in line with our published returns criteria. Any surplus capital, subject to maintaining an efficient balance sheet within Glencore's strong BBB/Baa credit ratings guidance, will be returned to shareholders, within an appropriate time frame and structure.
The transaction is subject to certain regulatory approvals (including MOFCOM) as well as the approval of MMG Limited shareholders. China Minmetals Non-Ferrous Metals Company Limited, which holds approximately 74% of the share capital of MMG Limited, has irrevocably committed to vote in favour of the transaction. The transaction is expected to close prior to the end of Q3 2014 and is being conducted pursuant to the Remedy Commitments entered into with MOFCOM at the time of Glencore's merger with Xstrata.
Commenting on today's announcement, Ivan Glasenberg, CEO of Glencore said:
"Today's announcement demonstrates our commitment to maximising value for our shareholders. Since we acquired Xstrata on 2nd May 2013, our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the Consortium. Our willingness to sell reflects the level of the offer and our conviction that we can utilise the sale proceeds to create additional shareholder value."
BMO Capital Markets Limited ("BMO Capital Markets") and Credit Suisse Securities (Europe) Limited ("Credit Suisse") are acting as financial advisors to Glencore in connection with the sale.
For further information, please contact:
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Charles Watenphul (Media) t: +41 (0) 41 709 2462 m: +41 (0) 79 904 33 20 [email protected] |
Paul Smith (Investors) t:+41 (0)41 709 2487 m: +41 (0)79 947 1348 [email protected] |
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About Glencore Xstrata
Glencore Xstrata is one of the world's largest global diversified natural resource companies. As a leading integrated producer and marketer of commodities with a well-balanced portfolio of diverse industrial assets, we are strongly positioned to capture value at every stage of the supply chain, from sourcing materials deep underground to delivering products to an international customer base.
The Group's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries. The Group's diversified operations comprise over 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities. We employ approximately 190,000 people, including contractors.
About Las Bambas
Las Bambas is a long-life copper development project with prospective exploration options. Located in Cotabambas, Apurimac Region of Peru, the project is at an advanced stage of construction and is scheduled to commence production in 2015.
As at 31 December 2013, Las Bambas had gross assets of US$4,420 million. Given that the project is still in a pre-production phase, Las Bambas' total profit for the financial year ended 31 December 2013 was US$(0.02) million.
Forward looking statements
This document contains statements that are, or may be deemed to be, "forward looking statements" which are prospective in nature. These forward looking statements may be identified by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", "shall", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore Xstrata's control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed on pages 18 to 31 of Glencore Xstrata's Annual Report 2013.
Neither Glencore Xstrata nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore Xstrata is not under any obligation and Glencore Xstrata and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore Xstrata since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
Disclaimer
BMO Capital Markets, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and Credit Suisse, which is authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, are acting for Glencore Xstrata plc and for no one else in connection with the sale process and will not be responsible to any person other than Glencore Xstrata plc for providing the protections afforded to clients of BMO Capital Markets or Credit Suisse, nor for providing advice in relation to the sale process, the content of this announcement or any matter referred to herein. Neither BMO Capital Markets, Credit Suisse nor any of their respective subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of BMO Capital Markets or Credit Suisse in connection with this announcement, any statement contained herein or otherwise.
